Monday, July 19, 2010

Google Sells Off After Q2 Earnings Report (Charts)

GOOG

 
Google Reported Q2 Earnings on Thursday, July 15, 2010


Overview
Google sold off, gapped down, on Friday, July 16 after the Q2 financial results were reported on Thursday to close the week at a dismal $459.60. GOOG is still above the July 6 YTD low of $436.07 but well below the benchmark $500.00 price. See the Latest Blog Posts and Blog Archive for the latest on a review of the Google second quarter financial results. See the Twitter posts for additional news. Below is a technical review of GOOG stock.

Google is down -1.69% for the week (dropping -6.97% or -$34.42 on Friday alone), but still up +3.29% for the month, down a -25.87% for the year, and up +58.00% since the March 9, 2009 market bottom. This equates to a not too bad -$7.89 for the week, a decent +14.65 for the month, a painful -$160.38 for the year, and +$168.71 since the March 9, 2009 market bottom. GOOG is down -26.67% or -$167.15 from the 2010 YTD high, of 626.75 on January 4.

By comparison, the overall market, the S&P 500, is down -1.21% for the week, up +3.32% for the month, down -4.50% for the year, up +57.40% since the March 9, 2009 market bottom, and down -12.52% from the 2010 YTD high on April 23. So, GOOG has been comparable to the market in July but underperforming the market YTD in  2010. GOOG has also been comparable to the the market since the March 9, 2009 market bottom.

A second Death Cross occurred on June 4, the 100 day simple moving average crossed below the 200 day simple moving average. Previously, the 50 day simple moving average crossed below the 200 day simple moving average - the Death Cross or Black Cross, on May 25. Earlier, the 50d sma had crossed below the 200d sma on March 4. GOOG YTD closing low was on July 6 at 436.07.

Google News and Fundamentals
A review and weekly update of Google Inc. news and fundamental analysis will be posted later. A review and weekly update of USA and World market and economic news and fundamental analysis is here. The IMF issued a partial update of their semi-annual World Economic Outlook as of June 30 which is reviewed here. The full semiannual World Economic Outlook issued in April is reviewed here. In summary, the IMF sees the world economic recovery continuing. Sentiment is "cautiously optimistic" perhaps leaning to "extremely cautious optimism" about the global recovery but it appears a second half 2010 slowdown is in progress for the world and the USA.

Google Daily Chart
Below is the GOOG daily chart for 2010. A monthly chart is included at the bottom of this page for a broader perspective.

Noteworthy Closing Prices on Daily Chart Below
Current $459.60 (Yellow horizontal line)
2010 YTD 1-4-10 High $626.75
2010 YTD 7-6-10 Low $436.07
YE 12-31-09 $619.98
10 Month EMA $494.23


Google Sells Off After Q2 Earnings Report


Intermediate-Term Trend The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, flipped to an intermediate-term bear market on Tuesday, May 4. That is, the 25d sma is now less than the 50d sma. Investors' disappointment over GOOG's Q2 financial results, the market pullback, Flash Crash, and general malaise of GOOG stock has pulled the sma's down.

Resistance The previous recent closing low of 472.05 on May 21 failed as support on July 16 and now has become resistance. The close on July 15 just before Q2 financial results were reported is benchmark resistance at 494.02. These prices are the first of many levels of resistance above that GOOG needs to regain and close above. GOOG is well below the January 4, 2010 YTD closing high and the 12-31-09 YE close of 626.75 and 619.98, respectively, both now important, and far away, resistance and benchmark prices.

Support Ulitmate support is the 2010 YTD closing low of 436.07 on July 6. That's the goal line stand for GOOG. This is the only short-term support. There may be longer term support from June, July, and August 2009 but this has not been proven by previous trading.

Moving Averages GOOG is below all the simple moving averages on the chart: 25d, 50d, 100d, and 200d. These sma's have spread out in a bearish fan. The 25d sma has broken down through 50d, 100d, and 200d sma's. The 50d is below the 100d and 200d sma's. The 100d is below the 200d. The 25d, 50d, 100d, and 200d sma's are descending.

Higher Uptrend Line The higher uptrend line, a rate of price ascent, is from the November 24, 2008 closing low of 257.44 up through the May 21, 2010 closing low of 472.05, a previous 2010 YTD closing low. GOOG has broken down through previous uptrend lines, so this is a new, redrawn uptrend line. GOOG broke down through this uptrend line on June 23, yet tested the trendline on July 13, 14, and 15 before gapping down below on July 16.

Lower Uptrend Line The lower uptrend line, a rate of price ascent, is from the November 24, 2008 closing low of 257.44 up through the July 6, 2010 YTD closing low of 436.07. GOOG has broken down through previous uptrend lines, so this is a new, redrawn uptrend line. GOOG has stayed above this trendline since bouncing above on July 7.

Downtrend Line The downtrend line, a rate of price descent, is from approximately the November 6, 2007 all-time closing high of 741.79 down through the January 4, 2010 high of 626.75, the peak YTD closing high so far. GOOG continues well below this downtrend line.

Relative Strength Index (RSI)
RSI 14 day = 44.93 is leaning oversold and is well above the unbelievable low of 4.79 on July 6
RSI 28 day = 43.74 is leaning oversold and is above 2010 lows in the mid-20s
The RSIs are above the YTD lows with plenty of upside. How much upside does GOOG have after the Q2 earnings report?

MACD (12,26,9)
The MACD flipped to bullish on July 12 in the price runup prior to earnings but appears to have peaked.

Volume GOOG traded 7.8M shares on Friday, July 16 which was the third highest trading volume of the year for Google. The 20 day moving average is approximately 3.2M. Volume has been above the 20d mva most of July after being below most of June.

Long-Term Trend The 10 month exponential moving average of 494.23 is a long-term indicator and shown on the monthly chart below. That is the line in the sand, so to speak, for the long term signal of a bull or bear market. GOOG continues below this indicator. GOOG has been mostly below this long term bear signal since May.

Conclusion The Q2 financial results disappointed but were more mixed than totally disappointing. GOOG continues in an intermediate term bear market and a long term bear market. GOOG has struggled below $500, the Bear Abyss. GOOG is now just above the 2010 YTD low. The RSI 14 and 28 day are leaning oversold and above the YTD lows. The MACD is bullish but this may be short-lived. The moving averages are in a bearish fan and include two Death Crosses.


GOOG Monthly Chart

Below is the monthly GOOG chart since January 2005 for a long-term perspective. The overall analysis and commentary are the same as for the daily chart above. The yellow horizontal line, the current price, plus the yellow downtrend and uptrend lines are the same, and as described, on the daily chart above. The white moving average line is the 10 month exponential moving average, which is the long-term bull or bear market signal, as discussed above with the daily chart.



Disclosure
We have no position in GOOG


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